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August 7, 2013

Funds to Watch: What Investors Are Eyeing Now

Morningstar's most-researched funds list reveals some possible trends

Another signal that the Great Rotation is at hand? Maybe not, but investors and advisors are at least looking into equity strategies.

Morningstar analyzed searches made on its three platforms—Morningstar Direct for institutional advisors, Morningstar Advisor Workstation and consumer-facing Morningstar.com—to see which funds were generating the most interest among individual and institutional investors, and financial advisors.

Across all three platforms, investors and advisors showed an increased interest in large-cap equities in the first part of the year, Morningstar found.

Individual investors were most interested in emerging market ETFs, while advisors preferred bond ETFs and large-cap strategies. The firm noted, however, that after showing limited interest in energy sector ETFs in the prior period, it topped the current list.

Similarly, after no bank loan strategies made the list of individual investors’ most researched funds in 2012, one was featured on both the top mutual funds and top ETFs list.

Morningstar also found that advisors’ interest in fixed income funds has slackened since 2012.

“Core equity and bond strategies largely remain the most-researched investments across our main product platforms, but changes to the number of searches in niche categories indicate that investors were switching gears in the first half of the year,“ Paul Justice, director of fund research for Morningstar, said in a statement. “In the institutional segment, we saw a dramatic increase in interest in international preferred stock and junk-rated domestic bonds, likely because of the rapid shift in interest rates in the United States.”